The Complete Guide
Staffing shortages and labor management are among today’s top challenges for restaurant and foodservice operators, given that employers simply cannot find enough qualified workers to satisfy their current demands for service. The aftereffects of the global pandemic are still being felt, with widespread economic anxiety and rising inflation leading to a major shift in the restaurant and hospitality landscape. As such, it has never been more challenging to maintain employee engagement, empower staff, and retain top talent.
Restaurant operators don’t have enough employees to support customer demand1
Operators say tech and automation will be used to battle the labor shortage2
Average loss gross revenue per store from improper staffing versus demand3
Meanwhile, 69% of hourly employees admit to living paycheck to paycheck and 70% of hourly employees say they have less than $500 saved in case of a rainy day.4,5
To make matters worse, almost 70% of hourly employees say that financial stress has a direct impact on their physical health, and 79% of employees worry about personal finances while at work.6,7
This presents a major obstacle for the hospitality industry, given that most of the workforce is on their feet for the entirety of their shift and are expected to deliver an exceptional guest experience every time.
In order to better develop leaders to support future profitability and reduce turnover, businesses must address the challenges faced by their employees head-on. The only near-term solution to the crisis is to find ways to leverage technologies to stay ahead of the curve to better battle this labor shortage. That’s where the benefit of earned wage access comes in.
Earned wage access (a component of on-demand pay) is a financial service that allows employees to access a portion of their earned wages on-demand, rather than waiting for traditional payday. On-demand pay ultimately provides employees with the flexibility to access their wages whenever they need them, offering a convenient alternative to the standard bi-weekly or monthly pay cycles.
On-demand pay can be particularly beneficial for employees who face unexpected expenses, financial emergencies, or who simply need better control over their cash flow. It offers greater flexibility and financial stability by allowing employees to access their earnings as needed, reducing their reliance on credit cards, payday loans, or other forms of high-interest borrowing. And it’s more than a trend, as demonstrated below.
Workers prefer employers that offer on-demand pay8
Workers reported fewer unplanned absences because of on-demand pay9
Workers would be willing to switch employers for on- demand pay10
The availability and frequency of on-demand pay may vary depending on the employer’s policies or the selected service provider. But a few key benefits for both employees and employers can be found below.
In summary: Getting early access to their pay after they earn it without having to wait until payday can help your employees meet their financial goals, which in turn can help you develop a more optimistic, more engaged, and more productive workforce.
Earned wage access works through a combination of technology, payroll integration, and financial partnerships. Here’s a general overview of how the process typically works from beginning to end:
Step 1: Employer integration
An on-demand pay solution requires access to the employer’s data to allow a feed of time and attendance information. The integration allows for real-time access to employee hour and wage data and facilitates the secure transfer of funds.
Step 2: Employee enrollment
The employee creates an account through an app or online platform where they will need to provide information like employment details and bank account information for fund transfers.
The on-demand pay system then continuously tracks the employee’s earned wages based on the hours worked and other payroll data.
Step 3: On-demand request
When an employee needs access to their available earned wages, they initiate the request through the app or platform. The system then process the request. Once approved, the funds are transferred to the employee’s bank account or digital wallet, which can range from minutes to hours.
Step 4: Deductions and Reconciliation
When the regular payday arrives, the on-demand pay system deducts the amount of wages that were accessed early from the employee’s upcoming paycheck, ensuring that the employee receives the remaining balance of their net pay. The system then generates reports and records to track and reconcile the early wage access transactions.
The exact workings of earned wage access can vary depending on the specific service provider and employer policies. Some providers may offer additional features such as financial wellness tools, budgeting assistance, pay cards, or educational resources to support employees in managing their finances.
Interested in learning more? Don’t hesitate to contact us to learn how Fourth’s on-demand pay solution, Fuego, can benefit you and your employees.
Give us a call today +1 (877) 539-5156, or click the button below.
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